The Salaried Real Estate Agent, Part III - Sales and Service - Two Very Different Skill Sets

By
Education & Training with Sell with Soul

Sales

Over the last few weeks, I've posted blogs about the concept of the Salaried Real Estate Agent. You can click here and here to catch up if you like.

Most who commented on my blogs didn't much care for the idea. And that's cool - it's what I expected.

But the negative comments really got me to thinking.  What's so darn special about OUR industry that the business model used by most other industries couldn't possibly work for ours? And let's be honest, our industry isn't exactly setting the world on fire with the retention and success rates for our practitioners...

Just so's you know, I like being paid on contingency - always have. My first real job was waitressing and I loved the idea of working for tips. My last job before I went into real estate was as a "outside SERVICE" representative in the employee benefits field where I was paid a salary + bonuses for every client I SERVICED (hold that thought). I liked those bonuses, so I took on as many clients as they'd allow, to the point where I had twice as many as any other SERVICE rep. Loved it.

In that employee benefits job, there were sales reps and service reps. The sales reps did what you'd expect them to do - they lunched, schmoozed, networked, cold-called, warm-called, popped-by, mass-mailed, advertised, etc. We service reps managed the business the sales reps brought in - as soon as the ink was dry on the contracts, those clients belonged to us, and the sales rep moved on to the next prospect.

The system worked well. The salespeople made rain; the service people took care of the customer. We service reps didn't just work 9-5 - it was in our job description to accommodate our clients even if that meant doing onsite employee meetings at 3am for the night shift. We had our own window offices and secretaries and expense accounts. We flew on corporate jets with our clients. Many of us had advanced industry-specific licenses. We were professionals.

But we weren't salespeople by any definition of the term. We SERVICED the business the sales force brought in and were well-trained (and well-paid) to do it. We were respected by the salespeople and by our clients (well, most of the time!) and didn't consider ourselves glorified assistants. None of us (as I recall) had any desire to move into sales - we were perfectly happy and satisfied working our a$$es off to fulfill the promises made by the rainmakers.

So, when I claim that a salaried real estate office could work - this is the model I'm referring to. Natural salespeople do what they do best... and what they enjoy. Natural servicepeople do what they do best... and what they enjoy.

Getting business ... and taking great care of that gotten business are two very different skill sets. Both are valuable and necessary to a successful business, whatever that business may be. Yes, even the real estate industry!

 

Posted by

It's Here!

 

The More Fun You Have Selling Real Estate, the More Real Estate You Will Sell! 
(True Story)
Order Your Here!

 

 

 

 

 

 

 

 

close

Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Toni Hogan 09/30/2010 08:52 AM
Groups:
Realtors®
Selling Soulfully
The Ninety-ninth Percentile
Real Estate Professionals
Bright Ideas
Tags:
compensation
all blogs

Spam prevention
Show All Comments
Rainmaker
186,651
Tanya Nouwens
RE/MAX ROYAL (JORDAN) INC. / Tanya Nouwens Inc. www.readysetsold.ca - Montreal West Island, QC
Montreal Real Estate Broker & Stager

OK, now I see what you're getting it, Jennifer.  It's actually much more of a team approach to providing real estate services.  I believe there are brokerages or teams within brokerages that operate in this way already.  The problem comes when rainmakers are not clear with clients about who, exactly, will be servicing their needs.  A lot of rainmakers are very high profile, and consumers really believe that this will be the person taking care of them once they sign the brokerage contract. They become disillusioned with the real estate industry in general when they discover very quickly that this is not actually the case. They key is to be upfront about the different roles from the very beginning. -- Tanya in Montreal

Jan 26, 2010 12:14 AM #2
Rainmaker
484,157
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Tanya - the thing is - most real estate agents don't have good support, if any at all. The model has us doing it all, even though the skill sets aren't interchangeable. Yes, many top producers have assistants, but from what I've seen, they aren' t treated or paid as professionals - and therefore the position doesn't attract someone who is capable of handling a complicated real estate transaction.

So, my proposal is to change the entire model so that both members of the team are well-paid professionals who respect each others' skills, talents and interests.

Many of the comments I received on the concept were along the lines of "Well, that sounds like an overpaid assistant position" and that's not at all what I mean. The last time I checked, putting and keeping a real estate deal together is NOT easy!!

Jan 26, 2010 12:31 AM #3
Ambassador
942,042
Suzanne McLaughlin
Sabinske & Associates, Inc. (Albertville, St. Michael) - Saint Michael, MN
Sabinske & Associates, Realtor

My broker and I work on this principal...although lately it's been a bit leaner.  I bring in business, he "sells" it, I service it.  I also service his clients.  I do all the behind-the-scenes marketing, etc.  When he goes on a listing appointment, for instance, I have the property on the MLS before he leaves the property so that the homeowner can see the listing up and running.  Then, I go to work and get it on the websites.  We pride ourselves on the best customer service.  I love your example.  It works for us. 

Jan 26, 2010 12:57 AM #4
Rainmaker
713,133
Cheryl Johnson
Highland Park, CA

The separation of sales and service absolutely works.

BUT.

The conundrum for a small independent broker is raising the capital needed to pay the salaries, and all the other expenses, consistently, every week and every month.

 

Suzanne, not to be nosey, but for the sake of discussion, is your broker paying you a salary, or are you on commission?

 

 

Jan 26, 2010 01:47 AM #5
Rainmaker
1,563,167
Sam Gamgee
Eugene, OR

Jennifer, This post is why I enjoy reading your blog.  You "buck the system" with a viewpoint that makes perfect sense.  Agents are perfectly willing to pay hundreds of dollars a month on new technology, advertising, and other expenses but often treat their team and assistants poorly.

An agent needs to leverage his or her time and talented assistants can be the best way to do that.  However, you get what you pay for.  I'll bet you can point to several examples of successful agents who follow the approach you espouse.

Jan 26, 2010 03:23 AM #6
Rainmaker
484,157
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Rick - I've actually worked under this approach twice. The first time I hired myself out as a licensed assistant to a natural rainmaker - he went from $180k/year to $500k/year and I got a nice juicy piece of that. The other time I started my own company with a rainmaker-type - she was responsible for bringing in new business and I took care of ALL the details, both upfront and behind the scenes. We did very well.

However, I can't say that I've seen too many examples of this outside my own window. Why? I'm guessing it's due to the traditional model of the agent doing it all until they're too busy to handle it and then they sloppily hand off the "drudge" work to an underpaid/underqualified assistant.

Cheryl - I don't believe in paying a salary to anyone who isn't earning it. But just because someone is not bringing in business doesn't mean they aren't earning their keep. I guarantee that if a rainmaker hires me to manage his or her business, I'll more than make up for the cost of having me around!

Suzanne - PERFECT! I'd actually like working that model myself.

Jan 26, 2010 04:01 AM #7
Rainmaker
1,563,167
Sam Gamgee
Eugene, OR

Jennifer, It takes the right assistant with an entrepreneurial bent to make your approach work.  A successful agent cannot wear all of the hats required in the business and take his or her business to a higher level.  A small business owner plays to his strengths and covers his weaknesses by using technology or hiring the right person.  Smart agents looking to grow their business should always be on the lookout for talented people they can team up with.

Jan 26, 2010 04:16 AM #8
Rainer
14,078
Lois Kubota
Keller Williams, Walnut Creek, California, DRE#01865028 - Walnut Creek, CA
DRE#01865028

Jen, I met you when you were working for the employee benefits firm back in 1992!  I was your customer and you were fabulous.  You made the job look easy and when I followed you working for the same company, I was so overwhelmed it was frightening. 

Although we were professionals, the disparity in earnings were huge.  Once I saw how much more money the sales people were making compared to those of us servicing, I set my sight on sales.  It took me a few years to get there, but eventually I owned my own business. 

You are right, there are some who love the servicing and some who loves the sales aspect.  But I don't feel like a sales person in real estate.  I feel like an advisor.  It's my job to know the market and do all the foot work in advance so I can help people make a good decision.

In the employee benefit industry, employers make decisions for generally one year, so it's easy to pass the business off to someone who will take care of the "stuff", but in our industry, we are dealing with higher stakes.  Large dollar amounts and huge decisions that may last for 20 or 30 years.  I don't think the industries are comparable.

When you own your own business, if something goes wrong it's your fault.   It makes you sharper and more accountable.  When most people are getting a salary there is less accountability.  Sure you might be bummed because you don't get the bonus or commission, but you still have the base salary to fall back on.

Jan 26, 2010 04:22 AM #9
Rainmaker
484,157
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Thanks for your comments, Lois! Ahhhh, the good old days (?). I just wanted to comment on the disparity in income - true, the sales people made more than we did IF THEY PERFORMED. Remember, they were paid on commission and we weren't. We made decent guaranteed salaries with a reasonably good bonus structure, but as I recall, the sales reps had to sell to eat. Which makes sense - again - the model attracted two different types of practitioners - the hunters who thrived on the challenge of a commission-based compensation and the worker-bees who probably wouldn't have.

I don't have any problem with salespeople/rainmakers making more money if they're taking more risk.

To argue some more ;-] - just because the current real estate structure is set up the way it is doesn't mean that it wouldn't better serve the customer (and the practitioner) if set up a different way. Yes, the employee benefits industry is different, but I'd venture to say that the decisions made by the decision-makers affect far more people and lives than one person who buys or sells a home. So, I don't agree that the accountability factor is less important in that industry than in ours.

And, as I've said a time or two in this debate - WHAT WE HAVE NOW IS NOT WORKING ALL THAT WELL!!! The real estate industry is hardly a model of success for anyone!

Jan 26, 2010 04:55 AM #10
Anonymous
Matt Jones

Great post!  I love your "outside the box" thinking.  Just because something has always been done a certain way doesn't mean it always has to be done that way.  Let's face it... our traditional model of real estate is seriously broken and needs fixing and I applaud anyone who is willing to look outside at other models for answers.

Jan 26, 2010 05:54 AM #11
Anonymous
Matt Jones

Great post!  I love your "outside the box" thinking.  Just because something has always been done a certain way doesn't mean it always has to be done that way.  Let's face it... our traditional model of real estate is seriously broken and needs fixing and I applaud anyone who is willing to look outside at other models for answers.

Jan 26, 2010 05:55 AM #12
Anonymous
Eric Hempler

How do you think things would work if the person were paid by the hour instead of a salary?

Jan 26, 2010 11:17 AM #13
Rainmaker
716,233
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY

Hi Jennifer,

I think that something like this would have to start when two people with similar philosophy but disparate talents decide to work together.  They can each play to their own strengths.  I don't know though if this has the makings of a salaried model or simply a team effort where there is a hand-off and one side handles customer service while the other is the rainmaker and takes care of marketing.  Maybe some of this is mixing apples and oranages for me.  To do it the salaried way there would need to be a good deal of capital that  could sustain the operation until it could float on its own.  In a tight market the issue would be generating enough income to meet the payroll.

Jan 26, 2010 12:16 PM #14
Rainer
22,260
Lisa Schmitt
Coldwell Banker Honig-Bell - Plainfield, IL

I want to totally co-sign onto Tanya's post. I've witnessed this model work and I've also witnessed my peers use it against agents with that kind of set up.

Jan 26, 2010 04:09 PM #15
Rainer
62,574
Bob Dunn
Sutton Group West Coast Realty - Abbotsford, BC

This model seems to be the natural progression from the mega agent teams. A few rainmakers and support staff with definitive task would work with greater efficiency and better economies of scale.

Jan 26, 2010 04:51 PM #16
Rainmaker
212,200
Dennis Swartz
Full Circle Property Management - Columbus, OH
MBA, GRI...experience counts!

I tried it for a while, and it worked great until my assistant moved. It takes the right mindset, a person you trust, and great teamwork. Otherwise, it will be a disaster. You just have to change your thinking.

Jan 26, 2010 09:29 PM #17
Rainmaker
713,133
Cheryl Johnson
Highland Park, CA

It kind of seems to me that at any given moment we are all talking about two (or more!)  different models, and we are not always talking about the same model, or clear which model we are talking about  :-)

Model A:  A team comprised of a top producing rainmaker and assistant(s).  The rainmaker pays the assistants a salary, but the rainmaker himself/herself is paid on commission, and the rainmaker is part of a brokerage where he/she pays a split or desk fee to the brokerage.

Model B:  The broker/owner of the brokerage pays all the agents a salary, and pays all the assistants and support staff a salary.

Jan 26, 2010 10:07 PM #18
Rainmaker
484,157
Jennifer Allan-Hagedorn
Sell with Soul - Pensacola Beach, FL
Author of Sell with Soul

Cheryl - you're right - there have been different models discussed which seems to be a little confusing. The model I like is that the rainmakers are paid for performance on some sort of commission structure, since that's motivating for them; while the supporting cast is paid a salary and possibly bonuses.

The rainmaker/assistant model is a good one, except that from what I've seen, the assistant is almost always assumed to be much less important than the rainmaker and is paid, trained and treated accordingly. Thus, the people who are attracted to assistant-hood are not qualified or motivated to professionally manage a busy real estate practice. I'd rather that the "assistant" be considered more of a partner since their contributions (if they're good!) are just as important as the salesperson.

So, to clarify, I'm not proposing that we simply pay the service staff more money to do what they're doing now, but rather create a model where the servicing member of the team is a professional in his or her own right and WORTH a level of compensation above what assistants are typically paid in the current model.

Jan 26, 2010 10:19 PM #19
Rainmaker
149,413
Ann Cordes
Century 21 Randall Morris and Associates, Waco - Waco, TX
Home Ownership is Not a Distant Dream

Jennifer, this really hit home for me. I am not so good as a rainmaker/lead generator. But I do well with handling the servicing. I would love to team up with someone, but haven't met anyone I really clicked with yet.

Feb 05, 2010 05:17 AM #20
Rainer
5,353
Kathy Ng
Cedar Realty Services - Philadelphia, PA

Just saw your post (and I'm new to activerain) and I find the salary+commission model for real estate agents interesting. How many real estate agents out there are good at: marketing/web+ graphic design/blogging/answering phones and follow up/patience and listening/transaction management ... all at once?  If it is a salary+commission company, in theory each person can be in charge of a different task, and since they are an employee they must do the job they are assigned to do.  I wonder how hard it would be to manage and measure the results though.

Apr 17, 2010 05:23 AM #21
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
484,157

Jennifer Allan-Hagedorn

Author of Sell with Soul
Ask me a question
*
*
*
*
Spam prevention